February 07, 2014

On Day 60 after the merger, American issues more stock

As part of its reorganization plan in bankruptcy, American Airlines came up with a very complicated way to issue stock in its company to pay off creditors.

On Friday, 60 days after the carrier merged with US Airways in December, the company said it will convert 41.9637 million shares of convertible preferred stock into common stock shares.

The mandatory conversion is part of American's plan to pay all of its creditors with equity in the newly merged company. Holders of the preferred stock will receive 30.56 shares of common stock for every $1,000 in stated value of the convertible stock.

For former shareholders of American's common stock, AAMRQ, they will received another distribution of 0.1750 shares in AAL stock on Monday.

Convertible note holders and American's labor groups also received equity distributions on Friday.

Another 41.9637 million preferred shares will be converted on March 9, the 90th day after the merger was completed.

American Airlines Group Inc. (the “Company”) today provided the following notice to holders of its Series A Convertible Preferred Stock (NASDAQ: AALCP) (the “Convertible Preferred Stock”) pursuant to Section 5.1 of the Certificate of Designations governing the terms of the Convertible Preferred Stock. Capitalized terms not otherwise defined in this notice have the meaning set forth in the Certificate of Designations.

41,963,700 shares of Convertible Preferred Stock will be converted into shares of Common Stock (NASDAQ: AAL) as of the close of business on February 7, 2014. By operation of the mandatory conversion mechanism contained in the Certificate of Designations, each holder will have approximately 39.73 percent of its shares of Convertible Preferred Stock mandatorily converted.

The Conversion Price used for determining the number of shares of Common Stock issuable upon conversion of the Convertible Preferred Stock is $32.7136. For each $1,000 in Stated Value of Convertible Preferred Stock mandatorily converted, Holders will receive 30.56 shares of Common Stock. Stated a different way, each share of Convertible Preferred Stock mandatorily converted will be converted into 0.7722 shares of Common Stock, subject to rounding.

The Depository Trust & Clearing Corporation (DTCC) will be processing the conversion on their systems on the morning of February 10, 2014.

The next Mandatory Conversion Date will occur on March 9, 2014. An additional 41,963,700 shares of Convertible Preferred will convert to Common Stock on that Mandatory Conversion Date. The conversion ratio will be determined based on the volume weighted average price of AAL for the five trading days prior to March 9, 2014.

The second Optional Conversion Period will commence on February 13, 2014.

Additional Common Stock Distributions

Pursuant to Section 4.5 of the Company’s Fourth Amended Joint Plan of Reorganization (the “Plan”), holders of AMR common stock (formerly traded under the symbol: “AAMRQ”) who received an initial distribution of shares of AAL in connection with the effective date of the Plan will receive, for each share of AMR common stock previously owned, a distribution of approximately 0.1750 shares of AAL on or about February 10, 2014. AAMRQ holders may in the future receive additional distributions based on the trading price of AAL common stock during the 120 day period after the effective date and the total amount of allowed claims, in each case, in accordance with the terms of the Plan.

Pursuant to Section 5.15 of the Plan, holders of convertible notes who elected to be treated as if they had converted their notes to AMR common stock prior to the effective date will also receive a distribution of shares of AAL. Individuals who held AMR’s 6.25% Convertible Senior Notes due 2014 and elected to be treated as if they held AMR common stock will receive 17.1795 shares of AAL for each $1,000 of principal amount thereof, and individuals who held AMR’s 4.5% Convertible Senior Notes due 2024 and elected to be treated as if they held AMR common stock will receive 8.000 shares of AAL for each $1,000 of principal amount thereof, in each case on or about February 10, 2014.

Also pursuant to the Plan, 1.2756 million shares are being distributed as part of the Labor Common Stock Allocation (as defined in the Plan).